ICE Brent falls again but consolidates amid lack of news

London (Platts)--8Sep2006

ICE Brent futures in London continued the downward trend of recent days
on Friday and broke through the $66/barrel mark in early trading, as the
market extended Thursday's weak settle amid bearish US inventory data, market
sources said.
At 1001 GMT October ICE Brent futures were at $66.28/barrel, down 25
cents from Thursday's settle. Earlier in the day the contract fell through the
$66/barrel mark down to $65.78/barrel, over a five-month intra day low.
"It's a bit of a continuation from Thursday, following on from the
bearish US stock data as there is little other news to push the price around,"
a London-based broker said.
On Thursday, the Energy Information Administration reported a 2.2
million barrel draw in crude stocks, higher than the 1.6 million barrel
decline analysts had projected, but less than the 2.9 million barrel drop
reported by American Petroleum Institute.
The EIA also reported a 700,000 barrel build in gasoline stocks, in
contrast to analyst estimates for a 650,000 barrel decline and a 3,000 barrel
draw reported by API.
Despite the general bearish sentiment and the lack of bullish news,
market players expected the drop to slow as prices near $65/barrel. This level
of support has been frequently mentioned over the past week as a level where
brokers expect hedge funds to reverse their short positions.
"I would expect to see some consolidation after so many days of falls. I
think the target is $65/barrel and then we may see a rebound," a broker said.
In other news, and adding to the bearish sentiment, OPEC appears to be
headed for another rollover of its production ceiling on September 11, when
ministers sit down to set output policy for the fourth quarter with the
realization that there is little more that they can do to ease the tightness
in global supply.
Qatari Oil Minister Abdullah al-Attiyah said September 7 oil markets
should not expect anything new from the meeting.
"In my opinion, OPEC has nothing new. It is producing at its actual
capacity," said Attiyah. "We will study supply and demand fundamentals but
there is nothing new in what OPEC can do."
--Jean-Luc Amos, jean-luc_amos@platts.com

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